MSU board approves budget that includes increases in tuition, financial aid

Contact: Terry Denbow, Vice President for University Relations, (517) 355-2262,

Jul 21, 2005

EAST LANSING, Mich. - The Michigan State University Board of Trustees today adopted a budget for fiscal year 2005-2006 that includes a baseline 8.4 percent tuition increase for all students. Adding in fees and rebates brings the effective tuition and fee increase to 9.3 percent for returning in-state undergraduate students and 13.5 percent for new in-state undergraduate students.

A historic 15 percent increase in recurring financial aid that will make an additional $6.4 million available to students also is included in the budget.

A typical returning lower-division (freshman or sophomore) student from Michigan taking 30 credits a year will pay $653 more a year in tuition and fees. A new full-time in-state lower-division student will pay $945 more.           

Through years of cost control, MSU has kept down housing rates, which will increase 5.2 percent, thus holding down total costs of an MSU education. A returning student's room, board and tuition will increase 7.5 percent. A new student will see a 9.9 percent increase.

"Tough fiscal management has been a hallmark of Michigan State and it continues," said David Porteous, chairperson of the MSU Board of Trustees. "Unfortunately, the circumstances of Michigan in terms of funding for higher education have continued a downward spiral. Increasing costs for students is always difficult, and we've focused on enhancing value and addressing future needs to ensure we can continue to provide top-quality education for our students and the state."

The increases come in the wake of years of cuts in state funding and MSU's struggle to hold costs down. State appropriations have decreased 12 percent in the past three years alone, and another 2 percent decrease is projected for this year. Still, MSU held the line on student costs through agreements with the state and through financial aid growth.

Over the past decade, by refusing to raise tuition at a rate comparable to other institutions, MSU gave up approximately $35 million compared to other Michigan public universities. MSU also has made deep cuts - some $66 million internally - including eliminating more than 500 positions.

To preserve access, the university's largest pool of financial aid - which totals more than $48 million - will be available for 2005-2006. The $6.4 million increase includes $5.4 million in additional regular financial aid, plus another $1 million for students who are just above eligibility for Pell Grants.

MSU's newly adopted budget also includes a $9.7 million commitment to enhance academic programs.

"We must assure that the value of a Michigan State degree to our students and our value to the state of Michigan are not diminished, particularly in the context of current global competition," said MSU President Lou Anna K. Simon. "With the commitment to academic quality and the significant financial aid that are part of this budget, we will not just weather the storm. We are working to position MSU and the people of Michigan for a brighter future."

Included in the tuition and fees percentage calculation is a $65-per-semester energy fee to address soaring energy costs. The board action includes a rebate of this fee to all students in fall semester. It also may be rebated for spring semester, depending on the status of state appropriations expected to be finalized in September. This fee will be reviewed annually and reduced if energy costs drop significantly.

In addition, certain science- and technology-intensive majors will be assessed fees to reflect the high costs - and high demand - for programs that require expensive equipment, laboratories and other infrastructure to provide cutting-edge instruction.

"We are presenting these increases and expanding financial aid to give students and their families time to plan and make arrangements," Simon said. "We recognize that we are all in this together."

"Last year's tuition increase was artificially low at 2.4 percent," said Acting Provost John Hudzik. "We kept our tuition low, anticipating the state would increase appropriations this year. However, the economy has not made that possible. If you view tuition over a two-year period, the actual increase averages 5.4 percent a year."

The tuition and fee adjustments will enable MSU to continue its long-term vision to strengthen and advance one of the state's most valuable resources - its world-known land-grant research university. U.S. News & World Report saluted MSU's nationally recognized blending of quality and affordability by naming MSU a "Best Value" university for 2005 - the only public university in the Big Ten to be so recognized.

"We plan to continue to be a best value," Simon said. "There are two sides to the value equation: access and quality. We have attempted to address access through a significant increase in financial aid. But we must have the resources to provide the quality we are known for to achieve the educational goals of our students, the state and the employers nationally and internationally who look to our students to be top-quality, work-ready, cutting-edge employees for tomorrow."

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